Asian markets unfazed after Yellen hints at rate hikes

Asian stock indexes were little changed on Wednesday as investors shrugged off comments from Federal Reserve chief Janet Yellen about the prospect of higher interest rates.

Regional markets reflected Wall Street with the major U.S. indexes finishing essentially flat overnight.

Japanese stocks were lower ahead of interim dividend payments by many Japanese companies. The first half of the fiscal year ends on Saturday, and shareholders as of Tuesday’s close were entitled to those dividends.

The ex-dividend sales had a roughly 130-point impact on the Nikkei NIK, -0.31%   on Wednesday, which was recently down 59 points, or 0.3%. Banks, which typically pay relatively rich dividends, were hard hit with the Topix bank subindex down 1.2%. Nikkei futures, which aren’t affected by ex-dividend trading, were recently up 0.4%.

The ex-dividend impact overshadowed the weaker yen, which would typically lift stocks.

The dollar JPYUSD, -0.559070%   has risen to around ¥112.30 from ¥111.55 at the end of Tuesday’s equities trading. It was helped by Yellen’s comment that the Fed “should be wary of raising rates too gradually,” which many market watchers consider to be hawkish. Rob Carnell, head of Asia research at ING, said it was “the strongest signal yet” of a December rate increase.

Fed-fund futures now show just a 17% chance that there will be no rate increases for the rest of the year, according to CME data, compared with 27% on Friday and 42% before last week’s Fed statement.

“With the focus back on monetary policy and particularly fiscal policies in the U.S., markets in the Asian region may sit tight,” said Jingyi Pan, a market strategist at IG Group.

Most Asian stock indexes early Wednesday were within 0.2% of Tuesday’s finishes.

One outlier was Taiwan, where the Taiex Y9999, +0.68%   was up 0.8% after hitting a six-week low on Tuesday amid a rebound in some roughed-up tech stocks. Largan3008, +5.57%   jumped 5.4% and Hon Hai 2317, +1.45%   climbed 1.5%.

Oil futures retraced some of their overnight declines in as an industry group said U.S. crude supplies fell slightly last week. The U.S. government’s oil inventory reading later Wednesday is expected to show a modest increase. December Brent oil futures were 0.3% higher at $58.08 a barrel.

Source: MarketWatch

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